The ZAR Exchange Rate Thread

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JStrike said:
Is that about how China started off with cheap, low cost manufacturing, and has now moved up the value chain (And their currency has been allowed to strengthen in response)?
I thought you didn't understand the point, or were wanting to present a theory to counter import substitution and currency stabilisation
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It used to be hong kong, Now made in China, which will be a factor for a long long time, then there will be "made in India" and after that it will be wherever sustainable cheap labour is available. Maybe one day made in Ethiopia but it's safe to say that the same scale of "Made in South Africa" will just never happen with the attitude, arrogance, costs and uncertainty of our local labour environment.
 
Vrotappel said:
Reason 1 - labour in SA is poor and expensive
Reason 2 - Labour laws
Reason 3 - anti-business sentiment in ruling party
Reason 4 - power woes

Get the picture?
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Never, they just can't see into reality and thus just dream about the long awaited "renaissance"!
 
Ho3n3r said:
Relevance to the thread?
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the relevance is as stated by JStrike, China is now producing quality products. I read an article in the economist recently about the Chinese producing construction equipment, competing with Caterpillar and Bell.
 
Vrotappel said:
LOL - markets dictate prices, SA is a price taker not a price maker.
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Uh, no. As Stiglitz et al suggested, we could easily, and cheaply, weaken the currency, which would provide stability and cost competitiveness
 
JStrike said:
Uh, no. As Stiglitz et al suggested, we could easily, and cheaply, weaken the currency, which would provide stability and cost competitiveness
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I would be very careful about taking the things Stiglitz says seriously, yes he is a Nobel Prize winner, but he is also a paid gun.
 
saturnz said:
I would be very careful about taking the things Stiglitz says seriously, yes he is a Nobel Prize winner, but he is also a paid gun.
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That is quite an accusation to make. And you are attacking his person rather than his economics
 
Vrotappel said:
Well the Rand has been weakening for two decades now. By your reasoning we should be ultra-competitive by now, yet we are not?
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Yup. The difference between us and the eastern countries is that they started with inferior quality but showed improving quality. We are staying with inferior quality and when looking at our country's issues it is quite obvious why. A weakening currency won't fix anything and will just make things worse.
 
saturnz said:
I would be very careful about taking the things Stiglitz says seriously, yes he is a Nobel Prize winner, but he is also a paid gun.
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+1
And another thing is, South Africa can not afford a weak currency. Lots of other things must be in place for that to succeed. Otherwise you just end up with double digits inflation, break down of supply chain which will lead to job losses which will lead to violent protests and crime. Economy = balancing act of finely tuned system
 
12.48 to the Dollar.

It's only going one way in the long term. I reckon that 11 will be the new high point, the Rand will probably not get better than 11.
And learn to love 12.48 because in the near future when it's 13.50 you'll look at this number with nostalgia.
 
saturnz said:
the relevance is as stated by JStrike, China is now producing quality products. I read an article in the economist recently about the Chinese producing construction equipment, competing with Caterpillar and Bell.
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There is no inherent reason why China cannot compete with the best German and Japanese worker. At this stage they can't but in 5-10 years max, they probably will.

China may be producing some quality products now, but they still don't produce the more sophisticated things which are probably still made in USA, Germany and Japan and the larger component is assembled then in China or Thailand.
 
Midnight_choir_drunk said:
"Made in Taiwan" was the running joke when I was a kid for something considered inferior quality. There's no reason South Africa (with this exchange rate) can't experience something of a new industrial revolution. On the whole (as amazing as it sounds) Intellectually, educationally and infrastructure wise we are well placed relative to where the Asian tigers economies were 40 years ago. We just "rack drisiprin !" and hive mind.
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How much crime was there in TW? How much labour unrest was there?
 
JStrike said:
Is that about how China started off with cheap, low cost manufacturing, and has now moved up the value chain (And their currency has been allowed to strengthen in response)?
I thought you didn't understand the point, or were wanting to present a theory to counter import substitution and currency stabilisation
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China still does cheap, low cost. They just do a slightly greater variety now.
 
Space_Chief said:
There is no inherent reason why China cannot compete with the best German and Japanese worker. At this stage they can't but in 5-10 years max, they probably will.

China may be producing some quality products now, but they still don't produce the more sophisticated things which are probably still made in USA, Germany and Japan and the larger component is assembled then in China or Thailand.
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But they make Apple
 
Many of you are missing the most important ingredient that countries like South Korea, Japan, Taiwan, Hong Kong, Singapore and soon China had in common. Education, and not run-of-the-mill education you get in other first world countries like the USA, UK etc. Those kids spend an insane amount of time in school, and even go to school after school. It's not unheard of for kids in East Asia to be in the classroom until 23:00.

That's part of the reason they were able to industrialise so quickly and become dominant economies despite having low populations (Excluding China and Japan). Some might think it's too harsh but I bet it cuts down on delinquency as well since all that school keeps kids off the street and forces them not to spend so much time screwing around playing video games, loitering, partying etc. Academic competition is embedded in the culture over there.

They also pump out insane numbers of technical graduates. Their tertiary course choices are more pragmatic. None of this "do what you love" BS. Kids go study engineering, accounting, computer science etc. because taking care of your parents in their old age is common over there, and that requires money a sociology/music graduate isn't going to make.

Until the SA education system is drastically improved a low rand isn't really in our favour.
 
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